Coinbase users fear hacking after erroneous emails

Cryptocurrency exchange company Coinbase has received thousands of complaints from customers around poor customer service and hacking. 

According to the BBC Coinbase mistakenly sent emails to 125,000 users, wrongly telling them their two-factor authentication settings had been changed. Coinbase said the emails were "not the result of malicious behaviour".

The alert caused alarm many among users, who feared their accounts had been hacked. Under most circumstances, only someone with access to the account could change two-factor authentication settings.

"I got the reply and panicked someone accessed my account or made withdrawals," one user tweeted.

The company said the error had been due to an issue with its notification system and apologised on social media, saying it was focused on building trust and "that issues like this can hurt that trust".

A subsequent report from CNBC found that thousands of customers have complained to the company. It interviewed customers across the US and a review of thousands of complaints revealed a pattern of account takeovers, where users see money suddenly vanish from their account, followed by poor customer service from Coinbase that made those users feel left hanging and angry.

Making the issue even worse, cryptocurrency transactions cannot be reversed, according to the FBI. Experts say once criminals access an account, funds can be drained in minutes.

Coinbase, which went public in April, has a market cap of about $65 billion, has more than 68 million users in 100-plus countries, more than 2,100 full-time employees and $223 billion in held assets, according to the company.

While the cryptocurrency exchange company has grown rapidly, complaints have continued to arise. Since 2016, Coinbase users have filed more than 11,000 complaints against Coinbase with the Federal Trade Commission and Consumer Financial Protection Bureau, mostly related to customer service.

Former employees told CNBC the company’s customer service practices shifted over time, with representatives struggling to keep up with demand.

Coinbase gave the following statement to CNBC: "Over the years, we’ve consistently updated our customer support offerings to help us scale. In early 2020, we moved to email as our primary channel of support. Many of our customer inquiries require our agents to conduct a significant amount of research to resolve the issue. And, to avoid long wait times, communicating asynchronously via email was the preferred method. However, we recognize that customers want real-time support, and that’s why we’re rolling out phone support for ATOs this month and live messaging for all customers later this year.”